NAO: Government needs to take a “stronger and more integrated” approach to reduce rising clinical negligence costs

The National Audit Office (NAO) has said that the Government needs to take a “stronger and more integrated” approach if it is to rein in the increasing cost of clinical negligence claims across the health and justice systems.

Over the last ten years, spending on clinical negligence for NHS Trusts has quadrupled from £0.4 billion in 2006-07 to £1.6 billion in 2016-17, while the number of successful clinical negligence claims where damages were awarded has more than doubled, from 2,800 to 7,300. The figures have been laid out in a new report published by the NAO last week.

The NAO has also said that the cost of clinical negligence claims is rising at a faster rate year-on-year, than NHS funding. In addition, trusts spending a higher proportion of their income on clinical negligence are significantly more likely to be in deficit. In 2015-16, for example, the 14 trusts that spent 4% or more of their income on clinical negligence were in deficit.

Further calculations from the NAO have shown that the increasing number of claims accounted for 45% of the overall increase in costs, while rising payments for damages and claimant legal costs accounted for 33% and 21% respectively. The fastest percentage rise was in claimant legal costs, which has risen from £77 million to £487 million over the same time period. This is mainly due to an increase in both the number of low- and medium-value claims of less than £250,000 and their average cost. In 2016-17, the claimant’s legal costs exceeded the damages awarded in 61% of claims settled.

The NAO has said that the Department of Health and NHS Resolution’s proposed actions to contain the rising cost of clinical negligence claims are unlikely to stop this growth.

For example, NHS Resolution has reduced the average cost per claim of its claims operations. It also challenges excessive charges of claimants’ legal firms, and saved £144 million in 2015-16 by challenging claimants’ legal costs. A number of further schemes are proposed to contain the costs, however, even if successfully implemented, these will only save some £90 million a year by 2020-21. By contrast, the spending on clinical negligence for Trusts is expected to double to £3.2 billion by 2020-21.

Amyas Morse, head of the NAO, said that the government lacks a coherent cross-government strategy, underpinned by policy, to support measures to tackle the rising cost of clinical negligence.

“The cost of clinical negligence in trusts is significant and rising fast, placing increasing financial pressure on an already stretched system,” said Morse.

“NHS Resolution and the department of Health are proposing measures to tackle this, but the expected savings are small compared with the predicted rise in overall costs. At £60 billion, up from £51 billion last year, the provision for clinical negligence in trusts is one of the biggest liabilities in the government accounts, and one of the fastest growing. Fundamentally changing the biggest drivers of increasing cost will require significant activity in policy and legislation, areas beyond my scope.”

Commenting on the NAO’s report, Dr Pallavi Bradshaw, senior medicolegal adviser at the Medical Protection Society, said: “The NAO is right to raise concerns about the rising cost of clinical negligence to the NHS.

“We believe legal reform is needed to help achieve a balance between compensation that is reasonable, but also affordable – both to the NHS and to healthcare professionals who are feeling the pressure of rising clinical negligence costs through their professional protection subscriptions.

“Of course controlling the cost of clinical negligence, once a claim is made, is just one component of a more sustainable system. This must go hand-in-hand with continual improvements in patient safety to help prevent adverse events, and a shift to a more open, learning environment in healthcare where mistakes are routinely discussed and learned from.”

However, James Bell, a clinical negligence partner at Hodge Jones & Allen, said that the report was “extremely disappointing” and that it the NAO had “failed patients” with it.

“The NAO have approached this issue with a narrow focus and seem to have air-brushed out of history the recommendations it made to the NHS to reduce clinical incidents in 2001, preferring instead to give the organisation a clean bill of health,” said Bell.

“The reality is that little or no progress has been made by the NHS to bring down the cost or number of claims.

“The continued focus on claimant lawyers as a solution for all the NHS’s financial ills is misguided and disproportionate. Lawyers’ fees are already tightly controlled, capped and limited due to recent reforms; they have to be reasonable and proportionate before they are paid and the courts rightly already hold the power to reduce any bill found to be excessive.

He added that delays caused by trusts and NHS Resolution can be unrelenting and are hugely distressing to clients.

“Often legal bills are massively increased as a result of the NHS’s failure to admit fault at an early stage and the way it conducts cases,” added Bell.